Providing termination benefits for employees

Abstract

A computer-based method for pricing and managing an insurance product under which an insurer will provide termination benefits to employees who are non-voluntarily terminated from employment by an employer. The product reduces adverse selection risks and durational risks associated with periods of unemployment.

Description

[0001]This application is a divisional of U.S. application Ser. No. 09 / 215,950, filed Dec. 18, 1998, now issued as U.S. Pat. No. 6,332,125, on Dec. 18, 2001.BACKGROUND OF THE INVENTION[0002]This invention relates to providing termination benefits for employees who have been non-voluntarily terminated from employment.[0003]One common way to control such benefits is through a private arrangement between an employer and each displaced employee, for example, a standard severance policy or a special termination package. Typical arrangements provide for a single payment on the date of termination. The amount of the termination payment is often based on the terminated employee's salary level and tenure. Outplacement services are sometimes offered.[0004]Government sponsored unemployment insurance programs also typically pay benefits for a fixed number of weeks and usually are funded by premiums imposed on employers.[0005]Private long-term disability insurance, funded by premiums, pays benef...

AI Technical Summary

Benefits of technology

[0010]Among other things, the invention overcomes previous concerns about the risks associated with adverse selection by employers in connection with employment termination insurance products and makes such products feasible and profitable.

[0023]In general, in another aspect of the invention, the durational risk is reduced by storing information about the qualifications of a terminated employee for reemployment, storing information about available jobs, and matching the stored information. Retraining seminar may also be provided.

[0024]Among the advantages of the invention are one or more of the following. For the employer, the insurance preserves cash flow, may reduce termination costs, makes the costs more predictable, helps manage earnings, protects against potentially catastrophic expenses associated with reductions in force, reduces exposure to displaced employee litigation, maintains current year deductibility of premiums paid, and enhances the image of the employer as a good corporate citizen. To the covered terminated employee, the invention provides salary continuation for a specified period of time during unemployment and results-oriented job placement services. To the insurer, the invention provides a needed coverage to a substantial global market at a quantifiable risk and competitive price. Risk of adverse selection by employers is reduced both with respect to the employer's employee pool as a whole, and with respect to individual cells of employees. The manager of the delivery of benefits receives a fee for services and a possibility of additional profit if it successfully reduces the period of unemployment after the termination.

Problems solved by technology

Although time between jobs tends to be limited for anyone who actively seeks a new job, it can be longer than is provided for in typical severance packages.

The “fixed” monthly living costs incurred by moderate and high income employees, such as mortgage, credit card debt, tuition, car and insurance payments, tend to be large.

An interruption in an employee's income stream after termination from one job and before the start of another one can cause disruption in life style and jeopardize his credit rating and therefore be a significant concern to him.

Many employers incur large costs for non-voluntary terminations of their employees.

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